The production line at the Mini factory, Oxford. Britain is expected to have surpassed France in 2013 to become Europe's third largest car manufacturer. Photograph: Oli Scarff/Getty Images

UK car manufacturing output will soon return to levels not seen since the 1970s, breaking four-decades-old records as companies pump billions of pounds into the sector, according to industry experts.

The Society of Motor Manufacturers and Traders (SMMT) has predicted that car makers will surpass the 1.92m vehicles built in Britain in 1972 within three years. The UK built 1.46m vehicles in 2012, a number expected to rise to a six-year high of more than 1.5m when figures for 2013 are published by the SMMT on 23 January.

Britain was Europe's fourth-largest car maker in 2012, behind Germany, Spain and France – the latter of which it may soon surpass. More than 40 firms build vehicles in the UK, with the biggest including Japan's Nissan in Sunderland; Indian-owned Jaguar Land Rover (JLR) in the West Midlands and north-west; and German-owned Mini in Oxford.

The government has held up the car sector as a poster child for UK industry, with around 80% of vehicles being exported.

Mike Hawes, SMMT chief executive, said the trade body was confident Britain would be manufacturing "more cars than ever before" within three years owing to the vast amount of investment pledged by carmakers. Firms announced a total of £2.5bn investment in carmaking in Britain in 2013, including JLR's decision to spend £1.5bn at its Solihull plant for the large-scale manufacture of aluminium-based vehicles, creating 1,700 new jobs.

The SMMT said the strong UK car market - with new car sales up 10.8% in 2013 - combined with a flexible workforce, supportive government policy, and expertise were all helping to attract investment.

But Hawes warned the Britain's continued membership of the EU would be vital to future investment. "We need a strong voice to shape regulation in Europe."

Lee Hopley, chief economist of the manufacturers' trade body EEF, said the success of the UK car industry was having a broader positive impact.

"The motor industry has been going great guns over the past couple of years, and it's not just because of the large vehicle manufacturers, it's also filtering into the supply chain," she said.

Hopley added that manufacturing improvement was likely to be more broad based over the coming months.

"If we look at the next year-18 months we should see more of an even performance across different parts of the manufacturing sector." She cited areas that feed into the construction sector as an example of where improvement was expected.